2

[Time Allowed: 3 Hours]

PRACTICEPAPER
[Maximum Marks: 80]
Questions: 1-8 (1 Mark), 9-12 (3 Marks), 13-14 (4 Marks), 15-16 (6 Marks), 17-24 (1 Mark), 25-28 (3 Marks),
29-30 (4 Marks), 31-32 (6 Marks)

Section A: Statistics for Economics

1. When you Work for some other person and get paid then you are his
Ans. Employee
2. The collected data are huge accumulation of numerical facts, i.e., raw material data. Raw data are not capable
of analysis and interpretation. It is necessary to arrange these data systematically. Organisation of data means
arrangement of raw data in such a way that the raw data becomes easy and convenient to use.
On the basis of above, state any tworeasons for classification of data.
Ans. (a) Classification is done in order to abridge vast data so that they become easily comprehensible.
(b) Classification is necessary to make analysis of the collected data easier.
3. Data represented with the help of an histogram can help in finding graphically:
(a) Median (b) Mode (c) Mean (d) All the above
Or

Frequency is an alternative to histogram.

Ans. (b)
Or

Polygon
4. The frequency distribution of two variables is called:
(a) Multivariate Distribution (b) Univariate Distribution
(c) Bivariate Distribution (d) None of the above
Ans. (c)
5. In a tabular presentation, data are presented in and
Ans. rows; columns
6 are those variables which cannot be numerically measured.
Ans. Attributes
7. Statistical methods are substitute for sense.
Ans. no, common
8. The resources which the producers have are:
(a) Limited (b) Have alternative uses (c) Both (a) and (b) (d) None of the above
Ans. (Cc)
 Practice Papers 363

Calculate median of the following distribution:

9.
0-10 30 - 40 40-50
Marks 10 - 20 20 -30
12 10
No. ofStudents 8 30 40

Marks No. of Students ()

Ans. 8
0-10 8
38
10-20 30
78
20 -30 40
90
30 40 12
100
40 - 50 10
Ef= 100

in the class 20-30.

Median = Size of item =50h item, which lies

Median = l,+
50 38
= 20 + x 10
40
12
= 20 + x 10
40
= 20+ 3 = 23

graphically:
10. Determine the value of mode 30 - 40 40- 50
10 - 20 20 -30
Expenditure 0-10 42 30
46 54
No. of Families 28
Or
given above.
Determine the value of median graphically for the data
Ans.

60 +

504

seeejo ON
40+

30

20

10 Mode =24

>X
0 10 20 Mo 30 40 50

Expenditure
364 ogetker anok Economics11
While determining the value of mode graphically following steps arc nvove
(a) Drawan histogram of the given data.
(6) Rectangle with the greatest height will be the modal class.
(c) Draw aline joining the top right point of the rectangle of the modal class with the top right point of the
of the class preceding the modal class. rectangle
(d) Similarly draw aline joining the top left point of the rectangle of the modal class with the top left point of the
rectangle of the class succeeding the modal class.
(e) From the point of intersection of the two diagonal lines draw aperpendicular on the OX axis.
() The point at which the perpendicular touches the OX axis gives us the modal value.
Or

c.f.
Expenditure
0-10 28 28
10-20 46 74
20-30 54 128
30 40 42 170
40-50 30 200

Ef= 200
Y

tna
ogni v e
200
Less
than

basis)
160

than
(less120
c.f.
80

40

Median Median= 24
X
10 20 30 40 50
Expenditure

While determining the value of median graphically following steps are involved:
(a) Draw 'Less than ogive' by plotting the value of the variable on the OX axis and the cumulative frequencies (Les
than) on the OY axis.
(b) Determine the value of Median by the formula Med = item,

(c) Locate this value on OY axis and from this point draw a line parallel to the OX axis to intersect the ogive.
(d) A perpendicular (1) drawn from this point of intersection on the OX axis gives us the value of median.
Note: We can determine the graphical value of median even by using the 'more than ogive'.
11. Calculate the weighted mean of the following data:
Marks (X) 81 76 74 58 70 73

Weight (W) 2 3
 Practice Papers 365

Marks
Ans. Weight WX
(X)
(W)
81
2 162
76
3 228
74 444
6
58 406
70 3 210
73 7 511
2W= 28 EWX = 1961

ZWX 1961
Weighted Mean = = 70.03
EW 28

12. Nisha calculated the arithmetic mean of the data given below as 28. She spilled water on the data by mistake, as
a result the frequency of one class became illegible. Help her to find the missing frequency.
X 0-10 10 20 20-30 30 40 40 50 50 -60
12 18 27 17 6

Ans. Let the missing frequency be Y.

Class f M.V. (m) fm

0 - 10 12 5 60

10 - 20 18 15 270

20 - 30 27 25 675

35 35 Y
30 40
17 45 765
40 - 50
50 60 6 55 330

f = 80 + Y Zfm = 2100 + 35Y

Zfm 2100 +35Y

X= 28= 28 (80+ Y) = 2100 + 35Y
2f 80+ Y
140
2240 + 28Y =2100 + 35Y ’ 140 = 7Y ’Y= = 20
7
Hence, the missing frequency is 20.
co-relation.
13. Define co-relation. State the three important tools used to study
Or

Distinguish between negative and positive co-relation with the help of relevant examples.
Ans. Corelation studies the relationship between two variables.
Three important tools used to study correlation are:
(a) Scatter Diagram
(b) Karl Pearson's co-efficient of correlation
(c) Speaman's rank correlation
 366 gether wite
Economics-11
The correlation Or
Sald to be positive when the given variables move together in the same direction, e.g., when incorme
() increases, consumption (C) also increases and
vice-versa.

Wnereas the correlation is said to be neeative' when the given variables move in opposite
of oranges falls its demand direction, e.g., when price
increases and vice-versa.
P J Doranges
oranges
P ‘ Doranges L
oranges
T4. Calcualte Mean Deviation and Co-eficient of mean
deviation, using arithmetic mean, from the following data.
Profits ) 0-10 10- 20 20 - 30 30 40 40 50
No. of Shops 10 20 30 50 40

Ans. Profit MV
No. of Shops )
0- 10 10 -20 -2 -20 26 260
10- 20 20 15 -10 -1 -20 16 320
20-30 30 25 6 180
30 40 50 35 10 1 50 4 200
40-50 40 45 20 2 80 14 560
Ef=150 Efde = 90 Ef(dc = 1520
X = A+ Efdx'
90
= 25 X 10
150
= 25 + 6 =31

M.D. = Ef|de| 1520 = 10.13

150

15. What is an Index Number? Analyse the important issues to be kept in mind while constructing an index number.
Or

Examine the role of Index Numbers in a situation of inflation in the economy.

Ans. Anindex number is a statistical device used for measuring changes in the magnitude of a group of related variables.
Important issues to be kept in mind while constructing an Index number are:
(a) Purpose of the index number should be clear and not vague.
(b) Selection of the items to be included in any index have to be selected carefully and they should be as representative
as possible.
(c) While selecting the base year it should be as normal as possible, and should also not be too far in the past. Ine
base year should be routinely updated.
(d) Choice of the formula to be used is another issue.
(e) Due care should be taken in the collection of data.
Or
Infation refers to a situation of sustained increase in the general price level.
Wholesale Price Index (WPI) is the most widely used price index, which is an indicator of the rate of inflation
economy. It is the only index which captures price movements in the economy in the most comprehensive way
indicates the price movements of the commodities in all trades and transactions. WPI is available on aweekly
economy
Thus. it is the most commonly accepted measure of inflation in the
 Practice Papers 367

piechart on the basis of the following information about Net Domestic Product by Industry of origin.
Preparea
16 Sector % Share
Primary 16.2
Secondary 25.4
Transport 27.5
Community and Social Service 12.8
Finance and Insurance 18.1
100.0

Ans. Index
46° Transport
99°
Secondary
58 Finance and Insurance

Primary
Service
Community and Social
65° 91

each value by 3.6. E.g. 16.2 x 3.6 = 58.32°.

converted into angles by multiplying
Note: %values have been
Microeconomics
Section B: Introductory
assunmption that:
Possibility Schedule is based on the constant (d) None of these
17. A Production (c) MRT is
decreasing (6) MRT is increasing
(a) MRT is 10
demanded increases from 5 units to
Ans. (b) quantity
given good, its
no change in the price of the
of
18. When despite willbe: (d) Less than
unity
then its elasticity of demand More than unity
units, (c)
(b) Unity
(a) Infinity
consumer.
Ans. (a) consumed by a
amount of two goods
combination of the
is any at
19 food that is eaten
bundle or a bundle restaurant. The cost of
Ans. Consumption eating meal at home
or in a
consumer behaviour
suggest
basic choice between 150. WVhat does the theory of
a
20. A person has restaurantmeal is?
whereasthe cost of restaurant? consumer
home is 100 home or in a meal. So a rational
consumer to do: eat at of the restaurant
the rational the MU per rupee
ofa meal at home is greater than
rupee
Ans. The MUper curve lies
the AVC curve.
will eat the meal at home. shaped and ATC
ATC and AVC curves are Or
21. Both
than Marginal Revenue (MR).
(AR) remains
competition, AverageRevenue
Onder imperfect
Ans. U' shaped; above Or

Greater
 368 ogether witk Economics-11
22. Profit of a firm equal to minus
Ans. Total Revenue; Total Cost
will lead to a situation of:
L3. T at a given price of 5, 10 units are demandded but 8 units are supplied. This
(a) Excess supply (c) Equilibrium (d) None of the above
(b) Excess demand
Ans. (b)
24. When the AR curve is downward sloping, MR curve is than the AR and also

sloping.
Ans. Less; downward sloping
25. Explain the effect of the following changes on the supply of the given good.
(a) An increase in the price of inputs (b) An improvement in the technology
Ans. (a) If the price of inputs (wages of labour, cost of raw materials and fueletc.) goes up, the cost of production willise
and as a result the supply of the commodity decreases.
(6) If there is an improvement in the technology used by the firm, the cost of production declines. Lower cost of
production increases the supply of a commodity.
26. Analyse the effect of Sarva Shiksha Abhiyan" campaign upon theProduction Possibility Curveof a country.
Use diagram.
Or

"Basically the economic problem is the problem of resource allocation." Elaborate.

Ans. "SarvaShiksha Abhiyan" campaign will promote education in the economy.
Education will raise the efficiency of a worker by making him skilled and
qualified and thereby he will contribute more effectively. This development
will increase the production potential of the economy and thereby shift the
Good
Y
country's Production Possibilities Curve upwards from Oab to Oab'.

X
b'
Good X
Or
It is correct to state that the economic problem is basically the 'problem of resource allocation'. This is so because of
the scarce resources available to satisfy the unlimited human wants.
Theresources which are already scarce can be put to a number of uses. But one has to pick and choose that resource
which willgive maximum satisfaction through the goods and services produced by it. So, basically it is the problem of
scarcity which leads to the problem of allocation of resources in an economy. This problem focusses upon the What,
'How' and For whom" aspects.
27. An individual undertakes retail business in the premises taken on rent. The business is financed by his own
savings. He also manages the business himself. What are the explicit costs and implicit costs in it which are
directly identifiable? Give reasons for your answer.
Ans. Explicit Costs:
Rent paid by the individual who undertakes retail business in the premises hired by him.
" Rent paid is a 'paid-out' cost incurred by this individual for hiring premises.
Implicit Costs:
Interest on his own savings invested in the business by him. It will be a 'paid-in' cost incurred by him to himselt.
Organisation/management of the business all by himself helps him save the payment tobe made toany manager
from outside, in return for the management skills hired. So, it is alsoa 'paid-in' cost.
 Practice Papers 369

following
28. Parulis operating her business in a perfectly competitive market. She is providing you with the
information and wants you to help her to find the level of output at which she will be in equilibrium. Aso provide
reason for the same.

Output (units) 1 4

Average Revenue () 20 20 20
20 20 20

Total Cost () 22 60 96 120

42 60

AR= MR TC MC
Output (units)
Ans.
) )
20 22 22

20 42 20

3 20 60 18

4 20 60 16

96 20 Equilibrium
5 20
20 120 24
6

to the Marginal Cost and Marginal Revenue approach.

In a perfectly competitive market, P = AR = MR. According
At this level of output, both the conditions of producers
the equilibrium is achieved at the level of 5 units of output.
equilibruim are being met with:
(a) MC = MR, i.e., 20 = 20
equilibrium.
(b) MCis greater thatn MR beyond this point of
that will result in
Price elasticity of demand of a go0d is (-)0.75. Calculate the percentage change in its price
29.
150% rise in its demand.
%change in quantity demanded of a good
Ans. Price elasticity of demand (Ped) %change in price
Given that
Ped =(-) 0.75
150
(0.75 =
%change in price
15000
%change in price = ) =(-) 200%

i.e., price falls by 200%.

%change in the price is (-) 200%,
for
"marginal cost and marginal revenue" approach. Give reasons
30. Identify the equilibrium level of output using
your answer.

Output Total Cost Marginal Cost

Price
(units)
1 10 10
6
2 15 5
6
3 21 6
6
4 28
6
37
6
 370 ogether wich Economics-11
Or
Give reas
Identify the three phases of the law of variable proportions on the basis of the given schedule.
Total Product
Variable Input Ans

(units) (units)
3

2 7

3 10

4 12

5 11

Total Marginal
Price Output Total Cost Marginal Revenue Revenue
Ans.
(units) () Cost ()
1 10 10 6 6
5 12 6
15
6
6 3 21 6 18 Equilibrium(: MR = MC)
7 24 6
6 4 28
30 6
6 5 37

Formulae used: TR = PxQ

MR, = TR, - TR-1
3rd level of output.
On the basis of the above schedule, the given producer is said to be in equilibrium at the
met with:
The reason being at this level of output, the two conditions of producer's equilibrium are being
(a) MR = MC, i.e., 6 = R6
level of output 7>6).
(b) MCis greater than MR, after the MC= MR output level, i.e., MC > MR at 4th
= AR = MR.
Note: We can also calculate MR directly as it is a perfectly competitive firm's case whose P
Or

Total Product Marginal Product Phases

Variable Input
(units) (units) (units)
1 3 3

2 4

3 10 3

4 12 2
5 11 -1

On the basis of the above schedule, in phase I, TP increases at an increasing rate, i.e., MP increases. Whenthe
variable factor is increased, efficient utilisation of the fixed factors take place due to specialisation. This ralses uv
efficiency of the variable factor. Phase I occurs till2nd level of output in the above schedule.
1anm
" In phase II, TP increases at a diminishing rate and reaches the maximum point. In this phase, MP startsdecline
a in
fixed factor, leading to
a
Beyond point, increasing the variable factor puts immense pressure on
efficiency. Phase II occurs till the 4 level of output.
fixed factorthat
In phase III, TP falls, i.e., MP becomes negative. There is so much pressure of variable factor on
the TP starts falling, i.e., MP becomes negative. Phase II starts from 5h level of output.
 Practice Papers 371

.AcOnsumer consumes Only two goods, i.e., X and y, Exnlain the

utility analysis. conditions of consumer's equilibrium Us

Explainthe concept of Marginal Rate of Substitution and its behaviour along the typical indifference curve. Give
numerical example and also give reason for its behaviour.
Ans. The two goods consumed by the consumer are
and Y. The conditions of equilibrium are:
MU6 MU,
(a) P,
P
(h) MU falls as more is consumed
Explanation:
MU6 MU, then the consumer will not be in equilibrium because per rupee MU, is greater than per
(a) Suppose
P P
rupee MU, This will rather induce the given consumer to buy more of good X by reducing expenditure on good

Y. This willlead to fall in MU, and rise in MU,, This will continue till Px
MUx MUy
Py
(6) Unless MU falls as more of a good is consumed, the consumer will not reach equilibrium.

[Note: (Explanation based on Px

MUX MUy is also correct).]
Py
Or
g0od
a consumer is willing to sacrifice quantity of one
Marginal Rate of Substitution (MRS)means the rate at which
toobtain more units of the other good.
having the
Suppose, the diferent combinations of these two goods,
Let the two goods being consumed be A and B.
same utility level, are:
AB
Good B MRS
Good A AA

4B: 1A
2
3B: 1A
good A.
of good A. For the third unit of
is willing to sacrifice 4 units of good B to obtain second unit more of good A. MRS
The consumer Utility of good A decreases as he
consumes
sacrifice less because Marginal
he is willing to the indiflerence curve.
consumer moves downwards along
decreases continuously, as the given government finding it low, fixes
minimum wage
14,000 per month. The
wage rate is
32. The equilibrium market decision. Use diagram.
18,000 per month. Examine the implications of this
rate at 14,000 per
government finds equilibrium market wage rate at S
Ans. If the month, the
minimum wage rate at? 18,000 per
month as low and fixes than the equilibrium
which is higher ()
Wage
rate
implication of this new wage rate following diagram.
with the help of the R 18,000
wage rate can be proven month is higher than the
rate of R 18,000 per
" Payment of wage 14,000 per month. 14,000 'AB' denotes excess
equilibrium wage rate of Supply of labour as shown
in supply of labour

" This leads to a situation of "Excess greater than

diagram equal to "AB". Since supply of labour is
the
may lead to unemployment equal to AB'
demand for labour, it in the D,
supply oflabour leads to areduction
" Pressure of excess which will gravitate towards 14,000, the
>X

market wage rate, Quantity of labour

equilibrium wage rate. tends to fall (as shown
quantitysupplied oflabour quantity demanded tends to rise (as
shown
" Inresponse to it, along the supply curve from point B to pOint A) andX)
by amovement towards point
along the demand curve from point A supplied of
by a movement
that the excess supply is finally eliminated as quantity demanded and quantity
X, rate of 14,000.
" It is at this point the equilibrium wage
labour are equal (0L)at